Utilities Want More Electric Cars Charging on the Grid

Utilities are not concerned about the effect of mass adoption of electric cars on the grid. In fact, they are incentivizing higher EV sales.

Every couple years, the notion that increased use of electric cars will bring down the U.S. electric grid is revisited. The alarmist stories are ironic because, in fact, utility companies want to see a steep rise in EVs—because cars that use electricity for fuel represent a new revenue source, as well as a means to shift demand for electricity to hours when the grid is underutilized. (See “Electric Vehicles and the Smart Grid.”)

It’s becoming harder for EV-doubters to sound the alarm about the grid—considering how utilities across the country are offering attractive perks, such as these:

Southern California Edison gives $450 to EV buyers, even if the electric car is used.

Both companies, plus San Diego Gas & Electric and New Jersey’s PSE&G, worked with BMW to offer a whopping $10,000 rebate on a new BMW electric vehicle.

JEA, a utility company in northeastern Florida, offers a rebate of up to $1,000 for purchased or leased plug-in vehicles.

Georgia Power, the largest utility in the state, offers incentives to residential customers of $250 (and up to $500 for businesses) for installing certain types of EV chargers.

Thanks to a rise in cheap, renewable energy, as well as natural gas production, utilities are experiencing an unprecedented decline in demand for electricity. This trend helps explain the incentives and why a group of 36 utility companies last month wrote a letter to Congress asking to remove the current cap on EV tax credits. The cap phases out the $7,500 federal tax credit on the purchase of EVs from companies that have sold more than 200,000 plug-in vehicles. Tesla will hit the 200,000-unit mark later this year, quickly followed by General Motors and Nissan. The utilities want the federal tax credit to stay in full effect without the cap.

An Unstoppable Global Movement

National Grid, the national electricity distribution network in Britain, went even further this month by advocating that all cars with combustion engines be banned by 2030. Graeme Cooper, National Grid’s director of electric vehicles, told a Parliamentary committee that the utility was confident about providing all the necessary infrastructure to support the wholesale transition to EVs by 2030.

The transition is not expected to take place at that rapid rate. Bloomberg projects that 15 percent of cars on U.S. roads will be EVs by 2040—up from less than 1 percent today. At that rate of growth, utilities will have more than sufficient time for any necessary upgrade to local equipment.

Hawaiian Electric Co. wants to speed up the transition. It created a roadmap that targets the majority of cars to run on electricity by 2045. “This roadmap lays out the steps for meeting the changing needs of our customers and communities and adapting to the new technologies we know are coming,” said Brennon Morioka, Hawaiian Electric manager for electrification of transportation. “This is a global movement that is transforming the way that individuals, families, and businesses use vehicles and we have to be ready.”

The utility believes that the increase in electricity demand will spread fixed costs over more users—saving its customers as much as $60 million in the next three decades. Those savings are on top of the reduced fuel costs and lower maintenance provided by electric cars.

The greatest reduction in the cost of fuel for any individual driver can be realized when owners opt for time-of-use rates and then charge their vehicles at night. Most utilities have time-of-use plans available for EV drivers. These plans help the utilities to spread the need to generate electricity throughout a 24-hour cycle. As a result, utilities reduce the price for a kilowatt-hour of energy for EV owners charging at night when the demand is the lowest. Most electric cars have dashboard or mobile-app functions that allow owners to plug in a car in the evening—but set the charging to start in the wee hours when the rates are lowest.

PG&E estimates that customers on its residential EV rate plans pay the equivalent of $1.20 a gallon of gasoline to charge their vehicle overnight.

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